So you think you're in trouble

The Problems of Managing High Growth

noreply@blogger.com (Laurence at Exigent) — Tue, 24 Jan 2012 13:02:00 +0000

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I am departing from my usual form of posting to include a link to an excerpt from a recent Webinar on managing high growth businesses. This short section, about 5 minutes, explores the problems of managing high growth and the consequences if not managed properly.

As this is not my usual form I am especially interested in our feedback as it will help me decide i this approach is worth adopting for future posts.

Exigent Consulting provides specialist services for High Growth Business , Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.

The 6 Signs of Dysfunctional Company Boards

noreply@blogger.com (Laurence at Exigent) — Tue, 17 Jan 2012 17:36:00 +0000

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I have written in the past few weeks about the problem with board meetings and the problem with sales meetings. It was suggested to me that it might be helpful if I explained what particular issues with a dysfunctional company board and how a well run company board would operate. In this article I intend to concentrate on dysfunctional boards or boards in crisis.

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So lets remind ourselves what issues should be addressed at board meetings? They’re the meeting that set the direction for the company, confirm policy, and directs the business response to unforeseen events either external like for example a significant change in market conditions or the arrival of a new or stronger competitor. The unforeseen events maybe internal like the loss of key staff or a major issue with sales or production. To get the best out of these meetings they should be held regularly and it should involve a review of the company’s performance.

So, if that's what a Board meeting should cover what do we typically see in a dysfunctional or crisis board.

Number 1 is not understanding the importance of a board meeting. As individuals and owners we tend work and think at an operational or detail level and it takes some effort and often some training to start to look at strategic and policy issues at a high level. Because operational issues tend to be more immediate and therefore urgent they get in the way of longer term but no less important considerations. Boards meetings are vital to the long term health of a business and are a necessary condition if you want a business to be successful over the long run. I have seen many situations where Board Meetings have gradually been dropped because well meaning owners and managers confuse them with operations or management meeting. Often its only when a crisis hits the business that the management team understand its importance and by then it can be too late.

Number 2 is where day-to-day operations dominate meetings. This is the most common situation and is a result of the first symptom. Typically the meeting will have no agenda and the participants will have made little or no preparation, consequently what gets discussed is what is on peoples minds at the time (management issues).

Number 3 is not having external advisers. In order to understand and address strategic issues, and probably any issue, it is beneficial to get external advice from people who are not intimately involved in the business. These people can be Non Executive Directors or external advisers. This separation gives them the ability to make key insights about the business and its relative performance that would not be possible from internal managers and directors, who often "cant sees the woods for the trees".

Number 4 is hearsay management. This is a situation where the business owner/ CEO makes decisions based on their gut instinct or impulse and without proper evidence. In these situations boards are often seen as a hindrance because board meetings are a forum where members can question and review key decisions. This type of situation is often coupled with number 5 where the CEO/MD has a low opinion of the management team and doesn't see great value in their input or they don't want to be challenged. I have found this later situation common in family run businesses where the control is kept within the family irrespective of capability and the unwanted scrutiny of a board meeting is something to avoid.

Number 6 the festering issue/disruptive director. These two often go hand in hand and the disruptive director is often a result of a long running issue that has been ignored, where he or they consider that a poor or no decision has been taken on a subject of great importance to them and despite numerous attempts the problem is avoided leaving a disgruntled board member. The result is that they will go to great lengths to try to raise the issue whilst everyone else will do their best to avoid it, as a result issue and those connected issues are not properly discussed and frequently board meetings are delayed or cancelled as part of the avoidance process. This situation is especially common where you have strong characters who will be persistent in the cause to the point of absurdity and in the long run is very damaging to a team. Often a climate of distrust will develop and worsen team relations the longer the issue is not openly discussed and some form of conclusion reached.

Whilst there are many issues surrounding board meetings don't let this list put you off, many companies have a well functioning board. My next blog post will look at what a properly functioning board look like. I would also like to take the opportunity to give my thanks to Ivor Middleton who assisted in the preparation of this article.

Exigent Consulting provides specialist services for High Growth Business , Business Turnaround, and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

The Problem with Sales Meetings......

noreply@blogger.com (Laurence at Exigent) — Fri, 30 Dec 2011 20:44:00 +0000

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Some while ago I wrote a short piece on the problem with board meetings, following work with recent clients it seems that there is also problems with sales meetings. Let me recount recent experiences to illustrate what I mean. The meeting starts well and their is an Agenda of sorts. What happens next is that a member of the team is asked to describe what they have done for the preceding month. There follows a long rambling commentary about how busy they have been and what opportunities their are and a volley of reasons why they haven't sold us much as they thought. This monologue took about 20 minutes.

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The next member of the sales team them repeated the process with one objective in mind; to spend more time talking that the person before him. Repeat that four times and your have a very long sales meeting. In the worst case it was 6 hours, yes, 6 hours I kid you not. Worst still, at least from my point of view, was that very little valuable information was provided either to management or from management. It was also clear that the sales team saw the meeting as largely a waste of time, and at 6 hours who can blame them. Having said that the sales team were also part of the problem.

Sales people by definition quite hard to manage. This is because they are trained to handle objections (management questioning) and get around obstacles (management questions and reporting). Put another way without a strong focus its difficult to put sales people on the spot. Except of course when they've just made a big sale and then of course they will remind you at every turn. We shouldn't criticise but simply understand that this is the nature of sales people and we just have to learn to manage it.

So the problem with sales meeting is that they are run by managers who are not trained as sales managers and who have to deal with trained sales people. In many cases it's just an unfair fight. The result is often that sales people don't treat the meeting with the respect it deserves and take advantage of their managers' lack of experience. This is not universal but in my experience it is a common situation.

So if you fall in this category as a manager/owner what can you do about it?

It all starts with asking the right questions. Sales meeting reporting need to be precise and unequivocal. By that I mean getting information from your sales people that is binary either a yes or no. So to keep control of a sales meeting its best to get your sales people to report on items such as business won in the month business lost in the month and business expected to close in the next month (or weekly depending on your sales cycle).

Getting sales people to report on numbers makes it easier for you to understand what is really going on. It also leaves much less wriggle room about what has or hasn't been achieved. As a manager/owner you will have a target for monthly sales you need to know are they being achieved and if so is thee significant over or under achievement. Depending on the answer, which by the way can be identified from the reports, you will know what kinds of questions to ask. It also means you can get through the meeting more rapidly because it becomes a Q&A session rather than a series on monologues. Further it will be easier to identify actions to take place before the next meeting thereby providing focus for future meetings and making it easier for you to stay in control.

You can get a sample of reporting formats I've been discussing by clicking here and downloading them.

I’m Sorry; But I’m Too Rich to Come into Work Today.

noreply@blogger.com (Laurence at Exigent) — Thu, 15 Dec 2011 16:59:00 +0000

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Success produces some unusual problems for a business. I was reminded of such when I read recent article in Business Insider that the proposed Facebook IPO will create over 1000 millionaires. This article goes on to give examples of some of the more exc

essive plans of these potential millionaires. The big question for Facebook, is how many of them will want to go back to their mundane jobs with such a big bank account balance.

There is no doubt that a fair percentage of them will at least for the short term continue with their day jobs, but as the realisation about what their wealth can do for them you can expect to see an increasing number having days off because they are just too rich.

The immediate problem for Facebook is that there are just so many of them. Can you imagine the problem facing Facebook if they all left at once, the loss of intellectual as well as cultural capital would be enormous. The difficulty for Facebook is that the normal rules of engagement don’t apply. Withholding pay, gets the so what response, as does any disciplinary procedure even being sacked would hold little fear. In a curious way Facebook are in a similar position to the banks and loan defaults; that is there comes a point when the large numbers of potential leavers (defaulters) becomes more of a problem in itself than putting sanctions against individuals.

This by no means a unique problem although it is rare, Microsoft faced a similar situation when they went public for the first time in 1986. There were faced with a large number of employees becoming millionaires and recognised the risks to the organisation. There is no silver bullet solution for this type of scenario as it is rarely faced by any business. From the scraps of information I have been able to assemble it seems that Microsoft tried to focus on staff attitudes and attempts to promote the non financial reasons why people go to work as a way of minimising the potential impact of such significant staff attrition.

They sought to identify reasons why very wealthy people would continue to come into work particularly if their jobs were relative low level. Senior Managers tend to be very driven and are often financially secure to a windfall would make a difference but not a significant one, for the most part.

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Technical staff were a different problem in that typically they are not motivated by money but the size of the windfall may disprove those assumptions. It seems that by offering ore technically challenging roles would go some way towards addressing the issue for this type of individual although equally you ant give them all more technically challenging rolls.

The biggest batch of potential leavers is this in administrative jobs where a million dollars is a mind boggling sum of money. This group is the most difficult to deal with, so spending some

time helping staff to prepare for the impending event will go some way towards exorcising the euphoria before the event.

Microsoft managed reasonably well in coping with this problem but things have changed a little since the 1980’s and we are a much more materialistic in our outlook so the problem could be much worse for Mark Zuckerberg and friends.

Managing a High Growth Business: Getting your Vision Right

noreply@blogger.com (Laurence at Exigent) — Wed, 02 Nov 2011 23:57:00 +0000

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Getting Your Vision Right

I have worked with many high growth businesses and contrary to much of the published research it is clear that many owners of successful and high growth businesses do not have a clear vision of where they want to go or indeed and why they should need to know. Many of the business owners I have worked would describe themselves as accidental success stories. That is to say they can't explain why their business is consistently successful or what actions they put in place got them to where they are now. However what is common, they all recognise that this is not a satisfactory state of affairs. Formalising their thoughts into a vision is not just an academic exercise it is important to be able to articulate why you are business.

A vision is not about targets or goals, it is about the reason you are in business for example Disney's vision is simply "To make people happy" Whilst Google's is "Make internet advertising better - less intrusive, more effective, and more useful" Kelloggs is "To be the food company of choice"

You will all have some kind of vision in your head but to communicate it effectively to your staff and the outside world it needs to be put down on paper, in doing so it will help you clarify your vision. You will see from the examples I have shown that a company vision is not about targets or goals but why you do what you do and how you do it. It should not change and it should be just as valid whether you are a 5 person company or a 5000 person company. It should be timeless.

Getting your vision right is important for any business, but for a fast growing business it is essential. Having a vision will provide the common sense of direction that will focus peoples’ activities to the benefit of the business. This common purpose is vital for the maintaining of consistent fast growth.

Managing a High Growth Business: Its the Culture, Stupid!

noreply@blogger.com (Laurence at Exigent) — Wed, 26 Oct 2011 16:16:00 +0000

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Culture is one of the most under rated aspects influencing a business. Get it right and you can support and promote cooperation to support and reinforce success. Get it wrong and you can say goodbye to a successful business and say hello to a world of hurt.

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BRITISH POET AND CRITIC MATTHEW ARNOLD
VIEWED "CULTURE" AS THE CULTIVATION
OF THE HUMANIST IDEAL.

Every business has a culture whether you know it or not, whether you've consciously tried to set one or not. Culture is set the day you start a business as it is a reflection of you, the owner, your values and personality. So if you like playing politics, politics will become an integral part of the business. Your values on customer service, sales, staff management in fact everything you do in business both internally and externally is influenced, if not dictated, by your culture.

Given its importance why is Culture not higher up on the list of things to explore when building a business. In fact it’s often completely overlooked. The reason for this I would suggest is that the critical impact that Culture has on a business is not well understood. It is often completely overlooked by advisers and start ups alike, under the misguided impression that culture is something for a big business to consider. This totally ignores the fact that having the wrong culture is likely to prevent you from getting to a big company in the first place. It is also because Culture is one of those soft touchy feely issues that tend to be avoided by by business people and is shunned by an ever more materialistic society. This is not intended to be a commentary on the importance of culture in our society but rather impact ignorance as an owner of what your business culture is and what it should be.

Taking this analysis further; incompatible cultures, or rather a lack of interest by the sellers of business and ignorance of the importance by buyers is the number 1 reason why so many acquisitions fail or at least fail to deliver a significant portion of the expected benefits. More worryingly ignorance of the importance of culture is the most common reason why the cost of integration is substantially more than projected.

How do you identify your culture?

This is a two step process. Firstly identify what you would like your culture to be then secondly ask your staff what they think it is. In order to make it easier for your staff to explain what they think is the company culture, distil the description of your culture into a few words. So for example; customer service, quality and price. Also recognise that the order of the words indicates their importance. For example a business with the keyword priority customer service, quality and price will have a significantly different culture to a business whose keyword priority is price, quality and customer service. Try it, you’ll find the answer illuminating.

If the culture is not what we want, how do we change it?

Changes in culture are notoriously difficult to implement because we are trying to change people’s attitudes. Change starts with you, as in all probability, you created the original by your actions or the appearance of your actions.

Step 1 clearly define what you want your culture to be in as much detail as possible, explain your rationale, then go on to describe how you will expect your management and staff to act. Then you follow a long process of reinforcing the culture across the business, but how you do this is the subject of a future article.

Cash is King -Yes, But Not at Any Price

noreply@blogger.com (Laurence at Exigent) — Thu, 06 Oct 2011 12:33:00 +0000

I was reminded the other day how people can get so focused on a mantra that they lose sight of context. Yes in a tough market Cash is King but not to the detriment of everything else.

Cash Is King

Let me explain, I was having a discussion with an internet business owner who was moaning about poor sales, and the fact that to get cash in he needed to reduce his margin. The more we talked the more I began to question the strategy of reducing price to get the cash in. His response always started with "well you know in these times Cash is King...

Eventually I got him to show me an example of how this worked for him. Once he had finished I asked him a question "Ok, so if you are giving away margin, are you making any profit at the reduced level?"

"Well that doesn't matter what is important is to get some cash in to pay suppliers and re order product." came the response.

"But surely if you are losing money on each sale getting the cash in, you are making the situation worse, not better. "

"At the moment getting cash in is whats important"

"How regularly are you doing this? Is this just to clear dead stock for example?"

"Quite frequently because when we put our products out at full price we are losing sales to cheaper providers so we use this to strategy to get the cash in"

At this point I was getting a little concerned, "But surely you must know if you are making a profit otherwise you will only be building up bigger and bigger losses, after all if you are only losing £1 per item if you sell 1000 of them you've lost £1000!"

"Yes but if you don't get the cash in when you need it you can't pay suppliers and they put you on stop"

We were in danger of getting into a circular argument, so I suggested that if he wanted we could look in detail at his pricing to see if he was making the situation worse or better. What we discovered subsequently was that he was indeed making a loss on his reduced items but more worryingly also on some of his regular priced items, and that his dedication to blindly follow the Cash is King mantra was killing his business.

So the moral of this story is yes "Cash is King" but getting cash in is only worth pursuing if its in the interests of your business. I do appreciate that there are times when you may make a loss sometimes; for example if you are off loading poor moving stock, but generating cash flow by cutting your margin without understanding the consequences of your actions is a dangerous strategy.

Managing a High Growth Business: The Problems of Badly Managed Growth

noreply@blogger.com (Laurence at Exigent) — Thu, 22 Sep 2011 15:09:00 +0000

Running a high growth business, requires a good deal of planning, and active management. It also requires a longer term view, unfortunately in very many cases fast growth happens by accident and therefore without sufficient planning to maintain growth and certainly not as a result of any long term view.

Never is this more relevant than when talking about plans for growth. The chart explains what happens all too frequently during a period of high growth. This is that after a year of rapid growth the organisation struggles resulting in little or negative growth for the next 18 month to 2 years before resuming . This is extremely stressful for businesses and often results in management backing away from further high growth because of the difficulties experienced

These difficulties include :

Huge effort from owners and staff delivering little or no rewards
Minimal or even negative financial returns as the cost of correcting the consequences wipe out most or all of the financial gains.
Deteriorating customer relationships because service levels cant keep up with revenues.
Low staff morale leading to lower productivity and high staff attrition which is made worse because typically that attrition is made up with a disproportionate amount of your best people.
Finally lost opportunity as management adopt a very cautious growth strategy because their experience of high growth was so painful.

It needn't be the case, making sure you manage the special circumstances that come with a high growth business you can maintain consistent growth over a longer period and consequently become a larger business more quickly and with much less pain.

Managing Fast Growing Businesses: The Planning Process

noreply@blogger.com (Laurence at Exigent) — Fri, 29 Jul 2011 13:16:00 +0000

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Managing Fast Growth

Whilst planning is important for all businesses it is vital in a high growth company. More importantly planning needs to be more thorough and detailed than in companies where growth is at a more leisurely pace. Its obvious really, issues come at you faster and more frequently in a high growth scenario and you and your management team need to be ready to deal with it. You can’t do this in a purely reactive mode, you and your management team need to have explored in detail the key linkages in your business and have some understanding of the potential stress points as well as solutions for different scenarios. If this seems a bit of overkill, it isn’t. Having been in the senior management team of a business that grew from 250 to 3500 staff in less than 10 years I know the pressures consistently fast growth puts on an organisation. One of the key reasons why so few businesses can consistently manage a high growth rate is because of this management commitment. It also demands that owners/directors have confidence in their management team and that they are able to properly delegate responsibility to this team.

So How Much Detail is Enough?

The answer is as much detail as you can get. The more detail you can obtain the better. I’m not just talking about P&L information but key metrics that drive the business, for example production metrics, recruitment metrics, detailed overhead costs, detailed variable costs, machine performance, average earner income, average earner output, recruitment costs, sales cycle length, average order value, and so on. The consequence of this information is to provide you with a very detailed understanding of your business. It also offers you a broad range of levers to use in guiding your business through the inevitable ups and downs of life. Most importantly it gives you a number of early warning indicators that if acted upon will require only a gentle nudge on the tiller, rather than a last minute heavy handed yank.

So Now You’ve Got it What Do You Do With It?

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Managing Fast Growth

Once you have all this information, you develop a reporting mechanism/model which requires all
key members of your management team to understand report and manage their functions or business using this standard. This is vital to provide the management team with the same business information where ever they are in the organisation, it also means that whatever job they do they can quickly get to the key information because they will be familiar with the format. In fast moving business management regularly move around so need support of model so they can quickly get to grips with their new position as the information and its format will be the same. In a personal example I was relocated from the UK to Australia. When I arrived I was able to get up to speeds very quickly because the model used down there was exactly the same as that which I used in the UK! It should become the basis of your regular management meetings as your knowledge of the model increases you will be able to more accurately predict company performance and be better able use the information to avoid difficulties.

Managing A High Growth Business : Matching Your Organisation to Your Sales

noreply@blogger.com (Laurence at Exigent) — Fri, 24 Jun 2011 14:21:00 +0000

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Growth Businesses Organisational Stress Points

This is the first in a series of posts concerning the successful management of high growth businesses. One of the most common problems high growth businesses face is how to match organisational growth with sales.

The Problem

Simply put sales can grow discretely and tends to be quite smooth as shown as the red curve. Organisations growth, by contrast, tends to be much more lumpy. This is because a certain staffing complement has a finite growth capacity and beyond that point just adding people doesn't help. In fact at some point adding people reduces performance. What is required is an organisational restructure which will create a step change in a companies ability to support its growth. However this is not easy to accomplish because most SME's address this problem too late. This often results in business growth reverting to the typical "lumpy" organisational restructure rather than a smooth increase. The reason for this is that sales now have to wait for the organisation to catch up so you tend to end up with a year of rapid growth followed by a year or even more of no or even negative growth.

Typical Situations

Smaller Businesses tend to rely too heavily on a few key people, this results in a stagnation of performance of the remaining staff who have little or no chance to develop their skills. So when the time comes to reorganise the business owners or management are reluctant to make the step change necessary to reorganise the business because they cant see who, apart from the usual suspects, who will be able to take on additional responsibility. What this results in is either a re-oganisation which is often half hearted or too late. To provide a sporting analogy, hammer throwers are always told that they must remain ahead of the hammer. So as they speed up their revolutions in the circle they can properly time an effective throw. Small businesses rather like a novice hammer thrower end up behind the hammer (read sales growth) losing control and finding out the hammer is in the wrong place.

The Solution

"Stay ahead of the Hammer!"

Some key actions:

Always! Always Always! Implement a reorganisation ahead of its need. This gives you time to fine tune it is also the only way you can main that rapid growth.

Establish a model for organisational growth. That is how will your business deal will sustained and rapid growth. Your plan must also be able to estimate at what point (size of revenues) will you be needing to consider the next reorganisation.

Reorganisations must have longevity. Typically a major reorganisation should last about 24 months, with interim adjustments taking place yearly.

Recognise that reorganisations get bigger as you get bigger, so have a post reorganisation quality control process.

Let me know what you think

Taking Your Business to the Gym: Getting Your Business Vision

noreply@blogger.com (Laurence at Exigent) — Tue, 14 Jun 2011 18:01:00 +0000

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The importance of your Business Vision

In order to build a business that will growth rapidly and sustainably you must first get "that Vision thing." George Bush Snr most notably suffered from his lack of what he called ‘the vision thing,’ a clarity of ideas and principles that could explain his philosophy. Without a solid and well thought out vision your chances of it acting as the beacon of your company’s aspirations and intentions will be short lived.

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Understanding and developing your Business Vision

For most people realising what their vision is and then putting it into words is a daunting task. I don’t think it helps when you hear examples of the visions for well known companies like Disney which is “to make people happy”. Many people I speak to are put off by the prospect of matching such examples. Don’t be put off, we can’t all be Disney.

Your vision is about your values. You could see your vision as how the future will change as a consequence of your actions. It is vital that you understand that your vision must have permanence and should not change over time. A good way of developing your vision is to describe it in a few words for example you might descri
be it with words like, ethical, profitable, fun, focused, detailed, customer centric, national, regional, global, local, quality, price-conscious and so on.

Resisting pressure to change

Inevitably at some point either you or more likely your employees or customers with put pressure on you to change your vision as it won’t suit them. This is the first test of its strength and your commitment. Your vision was set out because it reflects your personal aspirations about what your company should be. If you compromise then either you don’t really have a vision and your company is just a surrogate for a paid job, or more likely you lack confidence in your own view. Don’t weaken, by following your vision it will help you quickly decide which business opportunities are right for you and which not.

What a strong Vision gives you

Your vision determines your employees approach to business and it gives them a structure around which to work, it is the unifying force that turns individuals into a team. It also ensures that any new employee understands what is expected from him. It provides the underpinning of your company culture. It tells you customers what to expect from you. Your vision gives you above all consistency. Consistency is the mark of any successful business as both your staff and customers will know what to expect and know that they will receive it.

Inconsistency is the scourge of too many businesses and is often an indication of an absence of a vision or weak management unable to implant their vision on their employees.

Getting “the vision thing” right is absolutely fundamental to the development of a successful business, so take time to put your in place.

Leave a comment and let me know what you think.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Why Businesses Are Too Late in Seeking Turnaround Help

noreply@blogger.com (Laurence at Exigent) — Tue, 07 Jun 2011 17:49:00 +0000

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We all know that addressing problems early makes them easier to solve, and even when the treatment is unpleasant, like going to the dentist by and large we go in good time. Why is it, then, despite the harsh economic conditions and the large number of business owners clearly struggling to cope; it still seems that too many smaller businesses in the UK are reluctant to call in outside assistance even when it is clear that finding solutions to the issues impacting their business is beyond them?

Most independent businesses are in the hands of its founders, consequently these more than others find it difficult to view their business objectively. Most don't follow best practice and won't have regular management meetings nor generally do they have a detailed financial knowledge of the business. This lack of objectivity is the real issue. I cant count the number of times I've gone into a turnaround to discover that the owners have reluctantly called someone in, not because the business is in bad shape, but because they've exhausted their personal wealth in propping up a non performing business and now they've GOT to do something. Sadly, often at this point its too late.

Whilst no doubt there are clear legal tests to signify insolvency, these are seldom recognised by the management. They are invariably late talking to IP or turnaround specialists such as myself for the following reasons

1.they're emotionally tied to the company,

2 the stigma of failure,

3 being overly optimistic (well you have to be an optimist to run your own business) and as such you tend to overestimate income and underestimate costs,

4 poor business management.

There is a debate to be had about the almost complete absence of any type of business related subjects in general education which I submit leaves our entrepreneurs and business owners unnecessarily exposed. Many run businesses without even the most basic knowledge of financials or business or people management, so the wonder is why more businesses dont fail!

I would also observe that whilst accountants should provide advanced warning to business owners many don't because they are themselves technicians, and they concentrate on getting accounts completed on time. Experience has demonstrated that accountants are no better at running businesses than owners of other types of business. Also, because often their relationship with their client is too weak to survive bad news.

The problem with Board Meetings....

noreply@blogger.com (Laurence at Exigent) — Thu, 02 Jun 2011 19:25:00 +0000

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We seem to be very bad at prioritising meetings within organisations; we seem to be driven by knee jerk reaction rather than common sense, although I wonder if it should be more accurately described as uncommon sense. This is especially true of the SME sector, where board meetings seem to be the exception rather than the rule. Some of this is due to owner managers having little or no understanding of what as board meeting should cover or how to manage a meeting of this type. In my opinion a board meeting is the most important internal meeting a company can have. It is probably the only setting where strategy is discussed and policies made. It is not a place where detailed operational decisions are made, but in my experience this is all often what is discussed. This leads to confusion in the minds of participants and doubts about its importance/relevance and results in questions like don’t we cover this in the operations / marketing/ finance meeting?

So what are board meetings about? They’re the meeting that set the direction for the company, confirm policy, and directs the business response to unforeseen events either external like for example a significant change in market conditions or the arrival of a new or stronger competitor. The unforeseen events maybe internal like the loss of key staff or a major issue with sales or production. To get the best out of these meetings they should be held regularly and it should involve a review of the company’s performance.

So the problem with board meetings is simply that they’re not understood and not taken seriously so they can’t deliver the benefits to the business they should.

5 Steps to Making a Groupon Promotion Successful

noreply@blogger.com (Laurence at Exigent) — Mon, 23 May 2011 15:50:00 +0000

Groupon and Groupon style promotions are growing at an astonishing rate. The size of the Global opportunity is enormous. Originally developed out of the concept of the power of group buying, Groupon is now so large that it is now more about the exploitation of deep discounting to bring in new customers. Using this kind of marketing is by no means a sure thing. A recent study by Rice University Texas has highlighted some of the downsides of using Groupon. So what can you as a business owner do to maximise your chances of success?

First; do the numbers. The typical Groupon discount is 50% from which Groupon will take 50% of that leaving you 25% of the sales price. Calculate how much loss you will make on each sale. Its not quite as simple as this because some of the coupons purchased in advance will not be redeemed so you will get some revenue for nothing, a reasonable estimate would be about 10% of coupons will not be unclaimed although it will vary by product.

Second; using the numbers that you have calculated in the previous step calculate how much you are prepared to invest in this promotion, and therefore the number of discount vouchers you want to offer in this promotion. It is important that you set a limit as some businesses suffered serious losses because they underestimated the amount of take up of their offer and by not setting a limit had left themselves with an uncapped liability. By doing this you will also be able to identify how many extra full price purchases you'll need from your promotion to break even on your investment. Whilst it may not be important to you as an objective, it is always worth understanding the performance of your promotional activities.

Now you have set up the parameters your third step is to prepare your staff. Let them know when the promotion starts and the potential number of addition customers that might visit your premises. You want your staff to be ready to meet any sudden influx without a reduction in service levels. You also need them to understand that a significant number of clients will be paying by coupon, so you need to have a process in place to handle this efficiently.

Fourthly, plan your upsell programme, Groupon sales are only worth the investment if you can get these "Groupon" customers to purchase products at the full rate. Decide what and how you are going to upsell and encourage your staff to make this offer to everyone. A good way to do this would be to have a competition to see which member of staff has sold the most.

Fifthly; have a proper follow-up plan. If social media and CRM have taught us anything then it is that we should create a dialogue with out customers which will encourage new sales.

To Groupon or Not To Groupon That Is The Question

noreply@blogger.com (Laurence at Exigent) — Wed, 20 Apr 2011 16:24:00 +0000

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Groupon has been, and indeed still is, a business phenomenon. Its growth across the US has been explosive. It is now growing rapidly in the UK. Its message is to use the power of groups to get big discounts purchases of goods and services. In reality it is a careful repackaging of the discount Coupon.

For those of you who may be unfamiliar with the this company Groupon's business model is "group coupons": If enough people sign up, the deal "tips" into action (because Groupon is so large, and has so many followers almost all deals now tip). Groupon now has more than 50 million subscribers and aims for 150 million by year-end. Its revenues—about half the value of total transactions—were an estimated $760 million last year and should hit $2 billion or more this year. In addition there are a growing number of "Groupon" like competitors springing up. The market for this type of promotion, currently at least, is huge.

Many companies have benefited from Groupon style promotions but it does present longer term issues for business and particularly smaller businesses mainly because it is purely a price based promotion. Typically Groupon will want you to provide a 50% discount on normal price as a promotion. Groupon will then take 50% of that discounted figure. So a £10 meal nets the merchant £2.50. The objective is of course to encourage the Groupon diners to come back for a full price deal. The evidence for this is however patchy. A recent study indicates a growing number of "Groupon Customers" who only frequent establishments featuring Groupon deals and will only spend the minimum required. Still with those businesses with high fixed costs such as Restaurants and Spa's, getting additional customers in on slow days in the hope of converting them to full paying customers is relatively low cost marketing approach.

The longer term issue as I indicated earlier is that it is purely a price based promotion which will lead to a reduction in brand loyalty as customers recognise that they can return as new on the Groupon discount. Leading to a steady fall in the number of true new customers, matched by an increase in the number existing full price customers converting to Groupon customers to obtain the deep discounts.

Evidence is appearing that Groupon is excellent as a tactical marketing ploy, but increasing repetition could have a significant negative impact on a businesses longer term profitability.

For the smaller business a very careful analysis of the true cost of using a Groupon style promotion needs to be undertaken as getting it wrong could prove very damaging for your business

Maximising Repeat Sales Is Good For Your Business- Real World Data

noreply@blogger.com (Laurence at Exigent) — Mon, 28 Mar 2011 17:19:00 +0000

I dont often use information from clients but in this case I have made an exception and I am not given away any confidential information. The reason I am using this this information because it perfectly illustrates the old adage that it is better and cheaper to look after your customers, than to continually chase new customer sales. More importantly it puts it more elegantly than I ever could and this is a "real world" example from an online retailer, which is why such detailed information is available. I am very grateful to my client to be allowed to use this information.

Hi Laurence,

Following on from our meeting, I've calculated some costs for acquiring new customers as well as some stats on new vs repeat customers which makes interesting reading as below.It would seem a disproportionate amount of time and expense is focused on gaining new customers, when clearly there is greater advantage in targeting existing customers.

New visitors = 78% (of total visits), Revenue Share = 53% (of total revenue)

Repeat visitors = 22%, Revenue Share = 47%, Average order value = +5%

Cost of acquiring new customers = £8.60 per customer

Results: 47% of the revenue comes from 22% of visitors (repeat) who also spend more per order. Acquiring new customers is relatively expensive compared to marketing to existing customers.

Conclusion: Focus on existing customers more and/or increase number of repeat customers.

Another e-tailer client of mine struggles to build profits despite rapid turnover increase because of their very low repeat order rate; in their case 9%. The moral of this story is don't neglect your customers. They are your best source of revenue and they already know and like the products or services you provide.

Not Understanding Your Obligations to Staff Will Damage Your Pocket

noreply@blogger.com (Laurence at Exigent) — Mon, 14 Feb 2011 23:49:00 +0000

This post is about the importance of understanding the legal obligations a business owner has to his staff. It also illustrates that for Health and Safety and Employment Law there is little room for manoeuvre if the owner doesn’t get it exactly right.

The circumstances relate to a client of mine who ran a retail business. He had, as a result of an incident with a client, cause to disciple a member of staff which subsequently led to her dismissal. I should say at the point that the said staff member concerned was pregnant and we were all acutely aware that processes, procedures and actions had to be transparent and obviously above board. As I might add you should be with any disciplinary procedure. It is however well understood that with a pregnant lady involved additional close scrutiny is placed on the process by the tribunal and legal systems.

Following the dismissal an appeal process was followed and the decision upheld. The person concerned then sought to take the company to an industrial tribunal for unfair dismissal for discrimination because she was pregnant. The twist came on receipt of the claim. It was not only for unfair dismissal but for breach of health and safety because no formal risk assessment was undertaken by management once she had informed them of her condition. This issue had never been raised by the employee at any time through the process. Although informal discussions and agreement took place legally it doesn’t appear to make a lot of difference, although it might provide some mitigation, so rather unexpectedly my client has moved from having what he and his advisers considered a solid defence to a position where he might expect a 4 figure fine.

Whatever the rights and wrongs of this case and indeed the fairness of the situation it is crystal clear that owners must be absolutely on top of their legal obligations to their staff. This is a significant investment for many small businesses but as this owner found out not doing it could be more expensive still.

Do You Get Business From Social Networking - UK Poll Results

noreply@blogger.com (Laurence at Exigent) — Tue, 11 Jan 2011 21:05:00 +0000

Do You Get Business From Social Networking

I have been operating in the social marketing world for over 2 years now and during that time there has been a dichotomy of opinion about the merits of social networking as a means of obtaining business. There are the well know stories from the likes of Dell, Zappo's etc, but I wanted to see how Mr Small Business UK was fairing. So I put up a poll to find out.

I have been running this poll, aimed at UK based social networking activists to try to get an idea of how successful companies or individuals are at getting businesses using social media. My poll was posted on my blog and I was regularly referring to it via twitter and facebook. Over 3 months I got nearly 200 responses a small number I admit, but large enough to draw some conclusions. Broadly its 50/50. 50% are getting some business and 50% aren't. In order to to separate purely social users or those with no interest in business returns I separated the No's into No and No but I'd Like Too. It was this latter category that held the big surprise, 43% of people who'd like to get business from social networking are not. This left me wondering what was the reason for this, was it the fact that people hadn't been using it long enough to get results or was social networking a less productive marking strategy than has been touted.

To try to make sense of the results and to get a bigger sample I've put up a similar poll but made it more generic. That is relevant to social networking participants outside the UK. Hopeful I can have some more interesting results to report soon.

4 Simple Steps to Creating a 1 Page Business Plan

noreply@blogger.com (Laurence at Exigent) — Mon, 03 Jan 2011 17:48:00 +0000

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It’s that time of year again. No not Christmas, but a time when businesses should be measuring their performance in 2010 and putting in place plans for 2011. I hesitate at this point to bang on again about the need for planning but in my experience e

ven a simple plan makes a difference. Its not the plan itself, but the thought processes we have to go through to get there which is so valuable. If you are a business owner then before putting together any kind of business plan you need to get your personal goals sorted before you start on the business goals. It’s stating the obvious but if you want to reduce your work down to 3 days a week, there is no point in setting challenging growth targets for the business.

That aside what are the 4 steps?

Step 1 work out your overall business goals for 2011, they could for example be headline revenue or profit numbers, market recognition, market share or finding a full time manager. Don’t set too many of these 2 or 3 is sufficient. Having done that, you now have a baseline on which to focus.

Step 2 is to identify the non-financial Key Performance Goals, ideally no more than 4 or 5, which need to be achieved to help achieve your overall goal(s). They might be: staff morale, attendance performance, expanding a range of products, identifying other profitable niches.

Step 3 is to identify cost reduction goals. These might include for example, reduction in debtor days, or dead stock, or seeking early payment discounts. These goals are there to balance the operations of the business and not to let the drive for revenue to get out of hand. They are also important in supporting profit centred objectives.

Lastly Step 4 which is to identify revenue objectives. This is the easiest to identify for most people, the difficulty of course is to identify the 4 or 5 which are the most relevant. It should be clear t

o everyone that having too many goals will only distract the business because it will lose focus on what is really important.

Image via WikipediaHaving completed those steps you have defined and clarified your goals and the key steps you need to achieve to get to your overall goals. This is not a plan to put in your bottom draw and forget, but something to use to review monthly performance with your staff. Its simplicity helps you focus on the key issues to keep conversations focused on what is important. You can also break the plan down into its constituent parts and use it for different parts of the business. So typically revenue objectives can be given to sales, cost goals to finance and administration and so on. This simple plan has transformed the success of businesses who’ve used it so grab the opportunity and get a plan for 2011 now.

Are You Worried That Your Business Will Fail?

noreply@blogger.com (Laurence at Exigent) — Mon, 20 Dec 2010 17:32:00 +0000

For my last post of the year I thought I'd have another Guest blog. This is more as a help to an old friend who has recently published a book entitled “50 Essential Business Advice Tips To Help Prevent Your Business From Failing” This blog explains the thinking behind his book. You can get it as a free download and I'd encourage you to do so.

A happy Christmas to everyone and a prosperous 2011

Kind Regards

Laurence Ainsworth

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There are over 4.5 million businesses in the UK and every year 400,000 are formed, with nearly as many failing. Most businesses stay small or plateau at a certain turnover without being able to grow - probably because business owners are working ‘in’ the business rather than ‘on’ it; making tactical day to day decisions rather than strategic ones.

No one wants to fail in business; however statistics show that 1 in 3 businesses fail in the first year of business and a further 50% of the remainder don’t progress after the third year.

So what distinguishes a successful business?

How about the following?:

● Knowing your strengths and weaknesses

● Having targets in place

● A business plan covering all aspects of the business

● Effective targets and measurements in place

● Ensuring that product and service offerings meet the needs of the market

● Ability to create a competitive edge

● Efficient, clear and consistent business processes

● Inspired and driven leadership

Whatever stage your business is at, you could probably benefit by getting back to basics and reviewing all aspects of your business to identify what is missing.

Consider that your business is covered by the following ‘pillars’ of business: strategy, finance, sales, marketing, operations, resources and personal issues - if you could look at each of these in turn and identify what changes are required to ensure the future success of your business, this could form the basis of a business plan for your business.

Once you have identified those key areas in each ‘pillar’ that need addressing, the challenge is then to take action and improve the way that your business operates. The important thing here is to prioritise which actions to take from the list generated - what needs to be done ‘now’ and what can be done ‘next’? Then who is going to do what, by when and what is an indicator that this step has been achieved.

Finally put some appropriate targets and measures in place to ensure that this simple business plan is moving forward and impacting the profit and performance of your business.....leading to success not failure.

To help you with this task, a book has recently been compiled by Paul Green - “50 Essential Business Advice Tips To Help Prevent Your Business From Failing”. Available as a free download here: http ://www .paulgreen .biz /success _tips .htm

Why Web 3.0 Marketing Isn’t the Silver Bullet

noreply@blogger.com (Laurence at Exigent) — Mon, 15 Nov 2010 16:17:00 +0000

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You cant get to the top using the wrong tools

Almost every week I see some sort of marketing splurge about how cold calling is dead and how “web 2.0 or even 3.0” is the way to go. The latest and the reason for this article was the headline “Increase Cold Calling Success by 6-8 Hundred Percent” It’s message was by using Web 3.0 (can’t wait for Web 4.0) and social media best practises any salesman can increase their success by 6-8 Hundred Percent. At this point a stream of abuse and derision was about to leave my lips. However, I paused mainly in respect of those of a tender age and a delicate disposition, but realised that the writer had simply missed the point and was looking at the problem the wrong way, that is from the sellers perspective not the buyers.

I have recently been involved in selling a service to CEO, FD’s and Company Secretaries of the top 1000 businesses in the UK. What is abundantly clear is that using Web anything and social media as a way of contacting my suspects, is as likely to succeed in delivering orders as running backwards up Everest is likely to get you to the summit without falling off. The reason, simple, most senior executives of organisations of that size don’t use or need social media and many are surprisingly unskilled in the use of the internet. This is not only a function of their age but also the fact that they have been successful in establishing their own network using traditional face to face techniques. To them online techniques are irrelevant.

So what did work? Well cold calling, once we had made contact we could explain how our service was of benefit. We were able to generate a steady stream of meetings and sales. Why was that? After all according to many pundits call calling is interrupt driven and doesn’t develop the buyer seller relationship. All of this may be true but for our market it (cold calling) was a communications method they understood and could relate too, consequently it was effective.

My point is that the mix of marketing and sales processes required to be successful changes in every situation. Your marketing mix must reflect the expectations of your targets. Whilst useful, web 3.0 or any other sub-variant of marketing is not a panacea. The hype that social networking changes everything is just plain wrong, it doesn’t replace common sense and it isn’t a Silver Bullet, its just another arrow in the thoughtful marketers armoury.

Taking Your Business to the Gym – Resolving Decision Overload

noreply@blogger.com (Laurence at Exigent) — Thu, 04 Nov 2010 21:34:00 +0000

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Decision overload condition, as I have described in an earlier article Recognising Decision Overload is simply where the business owner becomes so swamped by the amount of decisions and tasks he has to complete that it stops the business in its tracks. This condition is often created by the business owner inadvertently training their staff that w

hen they come up against a problem, their best and/or safest course of action is not to make a decision, but, refer it to the business owner.

Having created, albeit unknowingly, this vicious circle the question is how do we create a virtuous circle?

The first step is to understand why business owners end up there in the first place. Often it’s because of the business owners lack of understanding that he shouldn’t attempt provide solutions for every problem, and second decision making should be “Fit for Purpose” and should not involve “gold plating the bathroom taps”. That is, don’t use a £100,000 a year man to make decisions on issues that can easily be made by a person paid £20,000 a year.

So how can this be achieved? The first step is to stop enforcing the vicious circle. Allow staff to make decisions. So when a member of staff says “I’ve got this problem; what do I do?” don’t rush to tell them but respond with “what do you think you should do?” Initially this will be met by a blank stare or even a look of amazement, but, fear not, this is the most important step. You could follow this up with “why don’t you go away and think about it for a bit and come back with some ideas and we can talk about which one is best”

Initially it is going to make things a little harder and slow down overall decision making but it is critical to allowing you to work your way out of a job and to allow your staff to fill it. Once over the initial shock you’ll be surprised how quickly some of your staff will learn to take decisions. This is a difficult area for many business owners as firstly; they are uncomfortable delegators and secondly; are perfectionists (often confused with control freaks, although they can be that too) and expect that staff will make all the same decisions as they would. This won’t happen they will make more mistakes than you the owner; they may not be quite as good decisions but the additional time gained by the business owner in delegating these decisions will more than make up for these additional interventions.

Image by West Virginia Blue via FlickrThis simple act of delegation and management can be enormously liberating. I can quote a number of occasions where just applying this process has transformed the performance of small businesses. It has freed the owner from almost unbearable stress and allowed him to concentrate on issues more deserving of his attention and transformed employee from mere jobsworths’ to committed and hugely valuable assets.

How to Build a Sustainable Sales Process—without a Rock Star

noreply@blogger.com (Laurence at Exigent) — Thu, 21 Oct 2010 21:34:00 +0000

Occasionally I have guest blogs on this site when I think the article is interesting and more importantly relevant to owner managed businesses. I have been recently running articles on structuring sales processes and building effective sales pipeline reporting tools. I read this article from Barbara Weaver Smith on her mission to help small businesses sell to big companies - "to" as they say "land whales"

Laurence Ainsworth

Exigent Consulting

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Image via WikipediaPundits are calling it “sales 2.0” or “the new world of sales.” Whatever you call it, the story line is the same—Elvis is dead. If you are going to make bigger sales to bigger customers, a rock star salesperson is not the way to go.

Chances are you built your company selling to companies with which you had some things in common—same region, shared friendships and associations, maybe even similar size and years in business. Almost like friends and family.

But to take your company to the next level, you need to venture out into new, unfamiliar territory, where you will meet tougher customers and much tougher competition. To do that, you need a sustainable sales process that rests on the performance of a cross-functional team, not a rock star.

Here’s why.

· Big companies (we call them “whales”) are afraid to do business with small companies. They are afraid you can’t deliver, that you will run out of capital, that you don’t understand how big companies work, and that your operations and customer service teams are just not sophisticated enough. No matter how much they want your innovative solution, they won’t buy it unless you alleviate all of those fears. And your sales person can’t do that! It will require participation of key subject matter experts, deeply involved in the sales process.

· The buyers in big companies (end users or purchasing agents) will never lose their jobs over a conventional choice of vendor. But they can definitely lose their jobs if they award a big contract to an unknown provider and the project tanks. You will have to win them over with the strength—breadth and depth—of your team.

· The corporate environment is getting much more stringent about the nature of relationships between their buyers and all sellers. They want to increase the distance between buyers and sellers and reduce familiarity. They want to avoid even the appearance of collusion or any improper value exchange. Your rock star salesperson, charismatic hail-fellow-well-met, is likely to have serious difficulty in making this transition.

So, what is the alternative? Go from a solo act to an orchestra. You need to develop a disciplined, systematic sales process, overseen by senior management, in which each pursuit of a large sale is directed by a skilled sales person who is not a rock star but a conductor guiding the performance of a cross-functional team.

The Whale Hunters Process™ advocates a plan of three stages—Scouting, Hunting, and Harvesting. The plan is designed to get your company positioned to sell deals at 10 to 20 times your current average account

The “scout” stage involves creating a Target Filter—a profile of your ideal customer—r researching the most promising companies, watching their behavior over time, and calling on them when they may have a propensity to buy.

In the “hunt” stage, train key subject matter experts to participate in the sale and develop a systematic process of discovery and disclosure that becomes your core sales process.

The “harvest” stage becomes important after you land a big account, but you can’t wait until them to implement best practices for bringing a new account on board. Be sure your team is as ready to deliver the services as it is to make the sale.

By following these steps, you will develop a disciplined process for marketing, sales, and delivery that will give you a considerable competitive advantage. It will not accommodate a rock star but will elevate the performance of ordinary people, well trained and seriously committed to the growth of your company.

You will have a process that you can measure, replicate, improve, scale, and teach to a stream of new hires.

Barbara Weaver Smith

October 2010

The Whale Hunters is a strategic sales coaching company that helps small businesses achieve explosive growth by landing bigger deals with bigger customers. The question is how can small businesses grow at a rate that will show results sooner rather than later? That’s where The Whale Hunters comes in – and we invite you to register for a free account which gives you access to the wealth of information on the new expanded Whale Hunters website– http://www.thewhalehunters.com - Barbara Weaver Smith founder The Whale Hunters

Taking Your Business to the Gym – Recognising Decision Overload

noreply@blogger.com (Laurence at Exigent) — Wed, 13 Oct 2010 18:09:00 +0000

The activity that most business owners find the most difficult is managing staff in particular delegating responsibility. Firstly owners need to understand that the most if not all their staff see working for a living as a way of earning a living at not as most business owners see it as a calling. They are not going to work long hours of overtime for nothing or commit wholly to a business in which they don’t have a stake; nonetheless they have skills which are often overlooked by Owners. It is also fair to say at this point that most independent businesses owners are not professional managers and have no experience of managing people.

A typical scenario is asking your staff to undertake a task and then deciding that they’re not doing the way you’d do it and either take it back entirely or get so involved with it that the staff member feels like you now own it. If this happens regularly then you the business owner are making the situation work by inadvertently training his staff to recognise that he is the solution to any problem. After all why make a decision on something that the boss may disagree with – better, don’t make a decision at all and pass it back to the boss. The result, the business owner gets more overloaded and ends up making decisions on all sorts of matters in which the business owner shouldn’t be involved. The result is increasing frustration on behalf of the owner who’s under pressure and now on a shorter fuse leading to more reinforcement to the staff that their best course of action is to leave it to the boss diverting yet more decisions and creating a paralysis in the business. This is what I call the decision overload condition, where simply the business owner becomes so swamped by the amount of decisions and tasks he has to complete that it stops the business in its tracks.

This condition is surprisingly common in owner managed businesses, and is often allowed to develop because owners are interested in progressing the business, well naturally and that because when they started they did everything they lose the understanding of the relationship between the job or activity and the market price for a person doing that job. By way of an example I was with a company owner who insisted on doing the route planning for his collection vehicles, his argument was that his staff couldn’t do it as well as he did. My response was to ask him would he pay somebody a salary similar to his (it was high five figures) to run route planning.

“Don’t be silly” he said “of course not I’d only pay about £25,000.”

“Then why” I asked “are you insisting on doing that job when you pay yourself almost 4 times the going rate. Doesn’t that mean your expectations are based on someone massively over qualified for the job at hand? Its no wonder you’re so overworked, what other jobs do you do that your over-qualified for?

You know I could almost hear the clank as the penny dropped.

Like an addiction, acceptance is the first step to a cure, but this is the subject of another article.

How to Build a Structured Sales Pipeline

noreply@blogger.com (Laurence at Exigent) — Sat, 25 Sep 2010 18:26:00 +0000

Following on from my earlier article “Developing a structured pipeline – The Issues” this article describes how to build the all too elusive, structured pipeline.

So to recap: what should a structured pipeline report aim to achieve?

Firstly, it should enable you to view each sale in a consistent manner.

Second, it should clearly identify if a sales opportunity has progressed or stagnated.

Thirdly, it should contained a factoring index which will more accurately reflect the true value of the pipeline

Fourthly, it should provide sales and/or company management with a consistent and reliable prediction of business that should be closed in the forthcoming period.

Fifth, it should be simple and relatively easy to complete (salespeople as a breed are poor at filling in reports).

Sixth, it should be focused on numbers rather than opinion.

To build a consistent view of each sales opportunity take the sales cycle in your business and break it down into discrete milestones.

So for example,

Milestone 1 is a lead or an enquiry who has identified desire to purchase your product or service.

Milestone 2 to progress the sale you need to demonstrate the product

Milestone 3 they have the budget to pay for your product

Milestone 4 you have submitted a proposal

Milestone 5 you’re on the shortlist

Milestone 6 you have a verbal order

Milestone 7 you have a written order.

The next step is to put percentages against these milestones for example, 1) 5%, 2)10%, 3) 20%, 4)25%, 5) 50%, 6) 90%, 7)100%. This approach allows you to build a factored pipeline i.e. the value of the opportunity time the percentage milestone. Don’t get hung up about whether the percentages should be this or that number what we are building is something that will give you a consistent view across all your sales opportunities and not something which reflects the precise chance of winning per opportunity. The progress of the sale can be shown in any way you like; this could be as a table, a graph, or a set of traffic light colours going from red to green as you move along the sales process. Other information you need is simple the prospect name, if it is a new or existing customer, the value of the opportunity and a projected win date.

By constructing what I have described you’ve gone a long way to getting a grip on your sales performance, you’ve now turned sales reporting into a set of numbers which over time you can analyse. For example you’ll see which sales have stagnated because they wont have moved along the pipeline for a period of time, you’ll be able to identify how overoptimistic you sales force are by comparing the projected win date with the actual win date. Most commonly this is between 3-6 months.

Now that you have a factored pipeline you can start to build up metrics on the relationship between the size of your pipeline and your monthly sales. It also now enables you to look forward because as your factored pipeline rises and falls to will your sales, thus you can act early as soon as you see your pipeline numbers dip.

You’re now at last starting to get some sensible numbers to enable you to plan your business and you have moved from a jolly nice chat to a shorter focused and more effective sales meeting. As the Meerkat would say “simples”.

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